The Effect of CEO Overconfidence on Corporate ESG Performance: An Empirical Study of Chinese A Share Listed Companies

Ahmed Abdelwahab, Yan Chen, Yasser Abdelwahab and Mohammed Azam
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Ahmed Abdelwahab: Department of Accounting, School of Accounting, Dongbei University of Finance and Economics, Dalian 116025, China.
Yan Chen: Department of Accounting, School of Accounting, Dongbei University of Finance and Economics, Dalian 116025, China.
Yasser Abdelwahab: Department of Business Administration, Faculty of Commerce, Mansoura University, Mansoura, Egypt.
Mohammed Azam: School of International Education, Dalian Jiaotong University, Dalian, China.

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Abstract: Environmental, social, and governance (ESG) has become a prominent focus in recent research. While existing studies emphasise the roles of corporate values, managerial traits, and shareholder preferences, the impact of CEO psychological biases, particularly overconfidence, on ESG outcomes remains underexplored. To fill this void, our study employs the upper echelon theory to investigate the potential influence of CEO overconfidence on corporate ESG performance. Specifically, we gathered data for Chinese A-share non-financial firms between 2007 and 2022. Our findings reveal that companies helmed by overconfident CEOs are more inclined to push for changes in ESG performance, especially with SOEs and high institutional investor engagement. Our study contributes to the literature on understanding the psychological dimensions of executive leadership in ESG performance. It offers practical implications for governance and policymaking in emerging markets with evolving ESG frameworks.

Date: 2025-06-05
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Published in Asian Journal of Economics, Business and Accounting, 2025, 25 (6), pp.121-135. ⟨10.9734/ajeba/2025/v25i61840⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-05100352

DOI: 10.9734/ajeba/2025/v25i61840

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